1. Rethinking Financial Services
Taking Stock of our achievements and forging the way forward
MICROFINANCE SERVICES

2. Opportunities for MFIs
Where are the low hanging fruits?
ACCESS FRONTIER
Given Current Products

3. Demand vs. Supply

4. 7% (1.9 million) of adults 16 years or older have taken up MFIs
How many adult Tanzanians have taken up MFIs?
7% (1.9 million) of adults 16 years or older have taken up MFIs

5. Demographics – Who are MFI users?
Demographic profile of MFI/micro lender clients similar to that of banks

6. 6 in 10 MFI users are male which have on average a higher level of education then the general population
MFI/micro lender clients are significantly skewed towards males

7. More than half of MFI users are youth, below 34 years
MFI/micro lender clients significantly more likely to be in the age group 25 to 34 years than adults in general
and significantly less likely to be in the 16 to 24 year age group and the 64+ year age group than the
national adult population

8. MFI users have a higher wealth status than the general population
The Progress out of Poverty Index (PPI) is a poverty measurement tool for organizations and businesses with a mission to serve the poor - developed by Grameen Foundation in collaboration with the Ford Foundation, and managed by the Innovations for Poverty Action. The first PPI was released in 2006 and has since then been customised for 45 countries. The PPI is statistically-sound, yet simple to use: the answers to 10 questions about a household’s characteristics are scored to compute the likelihood that the household is living below the poverty line – or above by only a narrow margin.  With the PPI, organizations can identify the clients, customers, or employees who are most likely to be poor or vulnerable to poverty, integrating objective poverty data into their assessments and strategic decision-making.
The PPI questions was built into the 2017 Tz demand side survey and the PPI index calculated. The PPI scores divided into 5 equal intervals and were labelled as follows:
PPI1 – Lowest quintile (0-20)
PPI2 – Second lowest quintile (21-40)
PPI3 – Middle quintile (41-60)
PPI4 – Second highest quintile (41-80)
PPI5 Highest quintile (81-100)
As the first and last intervals generated small sample sizes these were combined
There is a significant difference between the PPI distribution of MFI/micro lender clients and the national adult PPI distribution
- MFI/micro lender clients are significantly less likely to be in the lowest 2 PPI quintiles and
- significantly more likely to be in the middle and highest 2 PPI quintiles

9. MFI users are more likely to be formally employed or business owners than their non-user counterparts
MFI/micro lender clients significantly more likely to rely on formal employment and businesses for income
and significantly less likely to rely on income from farming/fishing

10. One third of MFI clients are based in Dar es Salaam
Like the banked population, MFI/micro lender clients significantly sewed towards DSM and other urban areas

11. MFI clients are more likely to be literate in both Kiswahili and English
Served adults are significantly more likely than adults in general an unserved adults to be able to read Swahili and English

12. MFI clients have higher levels of numeracy
served adults are significantly more likely to high levels of numeracy than adults in general as well as compared to unserved adults
- numeracy levels of unserved adults does not differ from the national population
served adults are significantly more likely than adults in general as well as compared to unbanked adults to be able to add, subtract; multiply and divide; no significant difference in this regard between unserved adults and the national adult population

13. 97% of MFI clients own a mobile phone
Served adults are significantly more likely than unserved and adults in general to:
Have access to a mobile phone
To personally own mobile phone
To have access to internet

14. Why Tanzanias take up MFIs and how do they use them?
Demographic profile of MFI/micro lender clients similar to that of banks

15. Three quarters of MFI clients started to use the service to obtain a loan
Most MFI clients took up services to access credit

16. Access to loans is the dominant service feature of MFIs
MFI/micro lender Clients are most likely to value having access to credit
SAFETY of money is valued by 20% of clients – referring to the money they borrow against

17. 3 in 10 MFI clients feel charges/interests are too high
MFI clients are most likely to dislike interest rates on loans
1 in 5 clients report that there is nothing they dislike

18. 14% of accounts are group accounts
Cannot analyse this further – base too small for those who don’t use in their own name

19. 3 in 10 accounts are inactive
Most (50%) served adults use MFI services less than once a month

20. Though 97% of MFI clients own a phone only 22% utilize it to access their services
Most used channel = branches – used by 78% of the clients – MOST OFTEN BY 69% of clients

21. Repayment conditions are favorable to MFI clients

22. Borrowing for reinvestment in business activities is a key driver for loan uptake
The most significant driver of borrowing for those who borrow from MFI/micro lenders is PRODUCTIVE INVESTMENT
63% of those who borrow from MFIs claim the main reason for borrowing is for productive investment

23. Where is the opportunity?
Demographic profile of MFI/micro lender clients similar to that of banks

24. 8 in 10 currently not served by MFIs have a form of identification
Significant skews:
Unserved adults from DSM significantly more likely than others to have proof of identity;
Unserved adults from DSM significantly more likely than others to have proof of residence
Unserved adults from DSM significantly more likely than others to have proof of identity AND residence

25. Proximity is a key challenge of MFIs
Though over half of registered MFIs are located in Dar es Salaam proximity is still a key challenge
Served adults in Zanzibar significantly more likely to have access in the EA/within 5km from where they live

26. % Uptake of Formal Services per Formal Service Provider

27. % Uptake of Formal Services per Formal Service Provider: Served (i. e
% Uptake of Formal Services per Formal Service Provider: Served (i.e. MFI/micro lender clients) vs. Unserved Adults
MFI/micro lender clients significantly more likely to use the services of other formal service providers than unserved (non-clients) adults

28. Perceived demand side barriers Perceived supply side barriers
MFI products are perceived to be costly and require a high initial deposit
Perceived demand side barriers
73% of unserved adults perceive the barriers to uptake of MFI services to be demand side barriers
32% of unserved lack awareness (don’t know these institutions)
Perceived supply side barriers